Statham had break points, mini breaks and a set point in the first set against eighth seeded Spaniard Albert Montanes, the world number 31, after some inspired serving and ground strokes.
But after double faulting to lose a first set tiebreak, the gap of 201 ranking places began to show and Montanes won 7-6 6-2.
The first set loss clearly affected Statham, who lost his focus and went 4-0 down in the second set.
Statham eventually took a long fifth game in the set but the gulf was too great for the New Zealander to bridge.
"I tried my best guys, sorry," Statham told the crowd afterwards. "It was a great match and I competed well in the first set but Albert was the best on the day."
With third seed Juan Carlos Ferrero retiring earlier today due to a sprained ankle against Swiss qualifier Michael Lammer, who has a ranking of 209, the draw has opened up for Montanes.
The Spaniard, whose first round victim was Australian qualifier James Lemke, could now make the semifinals of an ATP tournament without having to play anyone ranked in the top 200.
